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Thursday, May 5, 2016

Beauty and Barber Shops Can Get Help at IRS.gov

The IRS recognizes Small
Business Week May 1–7 by highlighting some of its most popular educational
products. If you are self-employed, visit IRS.gov for all your tax needs.
Knowing the tax rules can help your business start, grow and succeed. For
example, see IRS Publication
4902, Tips for the Cosmetology and Barber Industry. Here are some of the
topics included in this booklet or detailed on IRS.gov:

Report Tip Income. All tips
you receive are taxable income. If you have employees who receive $20 or
more in cash tips in any one month, they must report them to you. You must
withhold federal income, Social Security and Medicare taxes on the
reported tips. Learn more about these rules in the IRS video Reporting
Tips.

Business Expenses. You can deduct
ordinary and necessary expenses
that you pay to run your business. An ordinary expense is a common and
accepted cost for that type of business. A necessary expense is a cost
that is proper for that business. For example, cosmetologists are often
required to get a license or pay for a permit or certification. See Publication
535, Business Expenses for more on this topic.

Estimated Tax. If you are self-employed
you may need to make estimated
tax payments each year. If you do not pay enough tax during the year,
you may owe a penalty.
Use Form
1040-ES, Estimated Tax for Individuals to figure the tax. Direct
Pay, available on IRS.gov, now offers you the fastest and easiest way
to make these payments.

Depreciation of Assets. You can deduct the cost
of some assets over a number of years. For example, if you buy equipment
and furniture, you should depreciate
the cost of those items since you will normally use them for more than one
year. Check out the IRS webinar Depreciation
Basics to learn more.

Filing Your Taxes. If you have employees,
the IRS offers electronic
filing options for your federal payroll tax returns. IRS e-file is
fast, safe and accurate. You'll also receive an electronic acknowledgment
when the IRS accepts your e-filed return. You can use EFTPS
to make any federal tax payments.

Keeping Records. Everyone in business
must keep records. You must have good records to support the income,
expenses and credits that you report. Good records can help you keep track
of your business. They can also increase the likelihood of business
success. Watch the IRS video Good
Recordkeeping Helps Avoid Headaches at Tax Time to find out some of
the best practices.

Follow the IRS on Twitter! The IRS has three key accounts: @IRSnews,
@IRStaxpros
and @IRSenEspanol.
For all the IRS Small Business Week information, keep an eye on these IRS
Twitter accounts and the key hashtags: #IRSsbw16 and #DreamSmallBiz.

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I am a Certified QuickBooks ProAdvisor, a Certified QuickBooks Consultant, an ATP (Accredited Tax Preparer), CPB (Certified Public Bookkeeper), and CPP (Certified Payroll Professional). I have over 25 years experience as an accountant.